Legislators to county commissioners: Lottery funds will be in short supply

State Rep. Jimmy Dixon talks to members of the Wayne County Board of Commissioners Tuesday during their retreat.

State Rep. Jimmy Dixon's advice to Wayne County commissioners on what they should do about the county's share of state lottery revenues is simple -- "Get it all as quick as you can."

Dixon's message is a reaffirmation of what commissioners have been preaching for months -- a message fueled by concerns that the state will continue to shift lottery money away from its intended use to make up for state budget shortfalls.

The lottery was instituted as a way to support education.

Should the lottery money dry up, commissioners are concerned as well that a property tax increase would be needed to offset the loss of funding for school construction projects already in the works.

Dixon of Calypso, Reps. Larry Bell of Clinton and John Bell 0f Goldsboro, and Sens. Louis Pate of Mount Olive and Don Davis of Snow Hill told commissioners on Tuesday that they support local efforts to safeguard the money for school construction.

The legislators met with commissioners at their day-long planning retreat held at the Walnut Creek Country Club to talk about the state Association of County Commissioners' legislative goals -- the top goal being the reinstatement of lottery funds for school construction.

The Wayne County Board of Education is depending on about $2.2 million annually in lottery funding for two new schools in the Grantham and Spring Creek communities, Commissioner Steve Keen said.

"If we lose that then we would possibly have to look at a tax increase to offset that," Interim County Manager George Wood said. "We don't have that kind of money sitting around -- $2.2 million a year -- that we can just put in its place."

It is a problem for counties statewide, Keen said.

"A lot of the monies have already been borrowed (for school construction)," he said. "The bonds have already been passed in some of these counties, and they are relying on lottery funds."

While it is good to talk about the issue on a statewide basis, it is important to look at the local impact in Wayne County as well, Wood said.

"As you know we lost the ADM (average daily membership) funds also," he said. "I think that is pretty well gone. There has been no legislation talking about trying to bring that back."

The last year the county received ADM funding was 2006-07, when it got $1.8 million.

The county received $1,296,920 in lottery money in 2012-13, down from $2,634,979 in 2009-10 -- a loss of $1,338,059 annually.

"So I think you can see between the ADM and the lottery, we have been hit to the tune of a $2.8 million a year decrease in what we could put into school facilities," Wood said. "Our concern is, obviously, we would like to try to get that lottery money back. We know you are in very tight budgets. I think we have all read about the troubles the state is having with Medicaid.

"We would like to get that (lottery) money back. But if you can't do that, can we at least ask that you not take any more of it for the state's budget? I know some of the concerns in the past have been you continue to use it for education, but you divert it from capital outlay (construction) to operating expenses."

In response to questioning from Pate, Wood said the county normally borrows money for a school construction project and uses lottery for debt service.

Dixon asked what amount of lottery funds is available to the county.

There had been approximately $12 million, however, that money is basically committed for renovations at other schools in the county, Wood said.

The county just sent paperwork to Raleigh to draw down $6.1 million for those projects, he said.

The state Lottery Commission has a surplus of about $49 million -- about one-half of what the Legislature gives the counties for schools each year, Wood said.

Rep. John Bell said projections are that the total would be closer to $53 million.

The lottery money is desperately needed, Wood said.

If it is not possible to return all of the lost funding in a year, could it be phased back in over several years, commissioners asked.

"I never was a fan of the lottery," Pate said. "But it is here, and it was prescribed that it would be used in the way the law was written. I think we should stick with that and not tempt ourselves and use it for other purposes.

"I would like to see it get back to what you need."

Dixon, Davis and Rep. Larry Bell agreed.

Wood said his concern is that if the state shifts the money to cover operating costs then it is going to start being deferred away for other uses as well.

"Unfortunately, the precedence has been set, not only for the lottery fund, but for other funds," Dixon said. "Transportation stands out. Once that precedent is set, it is very difficult to change the precedent."

Keen said that state Rep. Bryan Holloway has indicated he will introduce a bill to address the issue during the legislative short session that begins next month.

Holloway said it might be a phase-in bill, possibly over three years, Keen said.